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India's Reliance Industries gains; new oil minister appointed
October 29, 2012 / 5:51 AM / 5 years ago

India's Reliance Industries gains; new oil minister appointed

MUMBAI, Oct 29 (Reuters) - Shares in Reliance Industries rose as much as 1.5 percent on Monday on hopes the appointment of a new oil minister would improve what has been seen as a contentious relationship between the energy conglomerate and the Indian government.

Veerappa Moily was appointed as the country’s new Petroleum and Natural Gas Minister, replacing Jaipal Reddy, as part of a broader cabinet reshuffle unveiled on Sunday.

“Sentiment-wise this would be positive, as with the earlier minister approvals were not coming on time. Talks between the company and the ministry may improve,” said an industry analyst at a large domestic brokerage, who declined to be identified.

V.K Vijayakumar, Investment strategist at Geogit BNP Paribas, said Moily may fast track some approvals.

“Further approval regarding the joint application by Reliance Industries and BP for KG-D6 gas might get expedited, that is one possibility,” he said.

Reliance, controlled by billionaire Mukesh Ambani, Asia’s second-richest man, has clashed with the oil ministry under Reddy over gas output at the conglomerate’s KG-D6 block in India’s east coast.

Reliance and partner BP Plc have blamed a decline in pressure and water ingress for falling production, and sought an increase in gas prices to justify higher expenditure to develop the block, but the government has so far remained unconvinced.

Hopes of an improved relationship were raised last week, when the oil ministry -- which must approve key work at KG-D6 -- did approve Reliance’s plans to further develop natural gas output at the block, according to local media reports.

Moody’s Investors Service said the approval was a positive development for Reliance’s credit profile as it signalled an improvement in a “thorny” relationship.

“If this improvement in relations between RIL and the government of India continues, we expect both sides to also reach a decision on gas prices,” Moody’s said in a weekly report on Monday, which made no mention of the change of oil minister.

Reliance shares were up 1.2 percent as of 0520 GMT, outperforming a 0.36 percent gain in the main NSE index.

Reddy will become the new Minister of Science and Technology and Earth Sciences in the latest reshuffle. Moily was previously the minister for corporate affairs & power. (Reporting by Rafael Nam; Additional reporting by Abhishek Vishnoi and Manoj Dharra; Editing by Richard Pullin)

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